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International Marketing© Thomson/South-Western
ChapterChapterChapterChapter
The International Political Economy4.1 National Demographics4.1 National Demographics
4.2 Economic Environment4.2 Economic Environment
4.3 Political and Legal Environments4.3 Political and Legal Environments
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Winning Strategies
Europe had a history of warfare and conflict between countries and cultures.
The second half of the 20th century is one of the longest periods of piece Europe has ever seen.
From Conflict to Unity
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Winning Strategies (continued)
In 1950, six countries formed an alliance to combine the coal and steel industries of Western Europe.
Treaties of Rome European Economic Community (EEC) European Community (EC)
From Conflict to Unity
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Winning Strategies (continued)
European Union (EU) a group of democratic European countries that
use treaties to work together economically and politically trade agreements some political control over economic policies helped ensure peace and economic development raised living standards euro stronger political voice
From Conflict to Unity
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Lesson 4.1
National Demographics
Goals Explain the importance of demographics
to international marketing. Describe the effect of population and
class on international marketing.
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Terms
developed countries newly industrialized countries developing countries Lorenz curve population pyramid social class
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IMPORTANCE OF DEMOGRAPHICS demographic factors
income age social status education
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IMPORTANCE OF DEMOGRAPHICS (continued)
developed countries first world countries
newly industrialized countries second world countries
developing countries third world countries
hard to classify countries
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Income Distribution per capita income Lorenz curve
quintiles line of absolute equality line of absolute inequality
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Education
The educational level of a country suggests two things. An educated workforce makes it easier for
an international company to expand into a market.
Individuals with higher educational levels are more likely to purchase the same types of products.
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>> C H E C K P O I N T
List the three levels of country development.
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POPULATION current world population is over 6.5
billion people projections of over 9 billion people by
2050 population pyramid
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Population Pyramid
High birth rate and high death rate
Youngest
Oldest
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Population Pyramid (continued)
A lower birth rate and a lower death rate
Youngest
Oldest
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Social Class Criteria to distinguish social class
include: income net worth education family history political power lifestyle
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Class Mobility Class mobility is the ability of
individuals to change social classes. Marketers sell products that allow
individuals to appear to belong to higher social classes.
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>> C H E C K P O I N T
Define social class and social mobility.
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Lesson 4.2
Economic Environment
Goals Describe the four types of economic
systems. Explain the effects of economic
integration on international marketing.
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Terms
economic system market economy mixed economy planned economy traditional economy free trade area
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THE POLITICAL ECONOMY
political economy mixed economy republic
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Economic Systems
market economy mixed economy
socialism
planned economy command economy
traditional economy
A country’s economic system governs how it controls the production, distribution, and consumption of goods and services.
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>> C H E C K P O I N T
List the four types of economic systems.
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ECONOMIC INTEGRATION
Global economic integration refers to the development of trading partnerships through the elimination of restrictions on trade.
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ECONOMIC INTEGRATION (continued)
free trade area customs union common market
economic union
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The Americas
North American Free Trade Agreement (NAFTA) a free trade zone linking Canada, the U.S.,
and Mexico
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The Americas (continued)
Central America Free Trade Agreement (CAFTA) links the U.S. with Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua, and the Dominican Republic
Free Trade Area of the Americas (FTAA) proposed
partner all countries in the Americas except Cuba
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>> C H E C K P O I N T
Name two types of free trade areas.
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Lesson 4.3
Political and Legal Environments
Goals Describe the different types of political
systems. Describe the different types of legal
systems.
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Terms political system democracy republic one-party state theocracy political risk legal system contract sustainability
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POLITICAL SYSTEMS
A political system sets the laws under which businesses operate. sovereign states protectorates
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Types of Political Systems democracy
direct elections by country’s citizens
republic citizens elect representatives
representatives vote on laws
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Types of Political Systems (continued)
one-party states only one political party communism
theocracy religion or faith plays a dominant role
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Political Risk When there is uncertainty about the
stability of a political or legal system, businesses face increased political risk. impact on long term planning
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Political Economy Movement
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>> C H E C K P O I N T
Name the four types of political systems.
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LEGAL SYSTEMS A legal system creates, interprets, and
enforces the laws of a country. statutory law
tries to put every specific legal issue into a specific law
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LEGAL SYSTEMS (continued)
case law allows for the interpretation of statutes to
specific laws
corruption misuse of an official position for one’s own
benefit
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Contract Law
A contract is any legally enforceable promise or set of promises made by one party to another.
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Sustainability Sustainability is a worldwide movement
to allow for economic development while minimizing negative impacts on the environment. “green” laws Kyoto Protocol
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>> C H E C K P O I N T
Describe the two types of legal systems.